Closing Bell: Sensex up 165 pts, Nifty above 19,400; IT, realty gain, power drags

Taking Stock: Market fails to hold record high; Nifty above 19,400, Sensex up 165 pts

BSE Midcap index touched a new high of 29,420.55 and Smallcap index record fresh high of 33,746.89.... Read More

Citius altius fortius – the Olympic motto meaning faster, higher, stronger is what the Indian equity markets are demonstrating with newer peaks being achieved. The triveni sangam of improving macro, healthy corporate balance sheet, and strong foreign and domestic flows seems to be among the key nudges for this rally.

While medium to long term, the trajectory seems intact, near-term we could see markets take some breather. While magnitude may not be very steep, markets seem to have discounted almost every positive new, more so in the mid and small cap segments. Markets are likely to get more nuanced, and bottom up stock picking will be the key.

The Nifty witnessed a volatile day of trade today. During the first half, it opened the gap up and also broke out of the seven days on the upside, however, as the day progressed it faced selling pressure at higher levels and sold off. It has come back in the range indicating a breakout failure. The Nifty is likely to consolidate in the range of 19300 – 19570 and until this range is decisively breached on either side we can expect the sideways price action to continue. Overall, the trend is positive, and Nifty is undergoing time-wise correction. The crucial support zone stands at 19360 – 19320 while the resistance zone is placed at 19550 – 19570.

As far as Bank Nifty is concerned, the Index continued to correct and traded in a downward-sloping channel. It has now reached the lower end of that channel and also the 50% Fibonacci retracement level (44600) which should attract buying interest. We expect the Bank Nifty to start recovering as it has now reached a crucial support zone. On the upside initially, we expect it to target 45000.

Markets traded volatile on the weekly expiry day but managed to end marginally higher. Initially, upbeat global cues triggered a gap-up start in Nifty, which was later followed by range bound move. However, a sharp decline in the second half trimmed the gains and it finally settled at 19413.75 levels. Meanwhile, a mixed trend was witnessed on the sectoral front wherein IT and realty posted strong gains while energy and auto were among the top losers.

Nifty’s failed attempt to break out from the 19300-19550 zone indicates further consolidation ahead. However, the prevailing buoyancy in the global markets, especially the US, would help in keeping the tone positive. Meanwhile, we recommend maintaining a cautious approach in the selection of stocks and focusing more on risk management.

Today’s domestic rally was supported by the contra bet buying of the IT stocks which was supported by stable margins, new generation business opportunities and moderation of USD, as latest US inflation is fast approaching the Fed’s target levels. The broad market was trading positively at the all-time high level in anticipation of buoyant Q1 result and low volatility (VIX). However, a mixed start to bank earnings, coupled with ongoing concerns about domestic inflation, attracted bearish sentiment towards the latter half.

The Indian rupee continued its winning streak for the fourth day in a row following stronger Asian currencies and foreign fund inflows. The local unit reversed part of its morning gains in anticipation of central bank intervention around 82.

In the near term, spot USDINR has support at 81.70 and resistance at 82.25.

The Nifty reached a new record high of 19567 but couldn't hold on due to selling pressure, resulting in a significant decline by the end of the day. It exhibited high volatility throughout. The daily Relative Strength Index (RSI) indicated a bearish crossover. Currently, the trend appears to be sideways in the short term. Support is expected at 19300, while resistance is seen at 19600.

The bears continue to dominate the market, as the Bank Nifty was unable to surpass the level of 45000. This indicates a bearish sentiment in the index. On the other hand, the bulls managed to hold the support level of 44700, which suggests some buying interest at that level. However, a break below this support level may open the gates for further downside towards 44500-44000, which coincides with the 20-day moving average (20DMA).

For the index to turn bullish, it needs to surpass the level of 45000 on a closing basis. This would indicate a potential shift in the market sentiment towards more bullishness.

Indian rupee closed 17 paise higher at 82.07 per dollar versus previous close of 82.24.

Benchmark indices ended higher in the highly volatile market on July 13.

At close, the Sensex was up 164.99 points or 0.25% at 65,558.89, and the Nifty was up 29.50 points or 0.15% at 19,413.80. About 1322 shares advanced, 2037 shares declined, and 129 shares unchanged.

Hindalco Industries, TCS, Infosys, LTIMindtree and Tech Mahindra were among the top gainers on the Nifty, while losers were Power Grid Corporation, Coal India, BPCL, UPL and Maruti Suzuki.

BSE midcap and smallcap indices down 0.5 percent each.

Selling was seen in the auto, capital goods, FMCG, healthcare, oil & gas and power sectors, while buying is witnessing in the bank, metal, realty and information technology names.

The Utkarsh Small Finance Bank (SFB) initial public offering has been subscribed 12 times on the second day of bidding today, stock exchange data showed at 2:51 pm.

The issue received bids for 148 crore shares against an issue size of 12 crore shares. The IPO will close for bidding on July 14. The Rs 500 crore issued, priced in the Rs 23-25 band, is a mix of new issue of shares and sale by existing shareholders.

The retail portion of the issue has been subscribed 31 times and the employee portion of the issue 7.5 times.

The part set aside for qualified institutional buyers was subscribed 2.1 times. The non-institutional portion of the IPO has been subscribed 20.3 times, with bids received for 65 crore shares, against the reserved portion of 3.2 crore shares.

-Underweight rating, target at Rs 900 per share
-Q1FY24 print missed across the board
-Overall CC, Services CC & EBIT margin declined Vs JPMorgan estimates
-Negative surprise on discretionary tech spends cuts driving project ramp downs
-Company maintained FY24 CC services revenue guidance at 6.5-8.5%
-Company maintained overall guidance at 6-8% & EBIT guidance at 18-19%

June CPI inflation at 4.8% was slightly higher than expectations with vegetable prices spiking up in June along with some increase in pulses prices. This trend in vegetable prices continued in July too. Core inflation was broadly unchanged at 5.1% but will likely moderate over the next few months. Overall, we see upside risks to CPI inflation over the next few months as monsoon-related risks on food prices play out.

The RBI will remain cautious and we continue to expect the RBI to remain on an extended pause as it watches for the domestic growth-inflation mix and global monetary policy decisions.